Østersund, Sweden September 2013Platform meetingTommy Sejersen Changes in the EU Financial Regulation and the Common Provisions (Financial issues) Question

Østersund, Sweden September 2013 Platform meetingTommy Sejersen

Changes in the EU Financial Regulation and the Common Provisions (Financial issues)

Question and answer session

Consequences for LIFE+ Common Provisions

Østersund, Sweden September 2013 Platform meeting2

1. Additional clause for running 2011 projects regarding interests on pre-financing (formerly art. 24)

-> No need to report them as interest on PF to EC anymore but still considered as income

2. Modifications introduced to LIFE+ 2012 Common Provisions which were already published with 2012 call for proposals

-> Link to revised version and explanatory note sent with question letters

3. Further modifications introduced in LIFE+ 2013 Common Provisions

Document published with the 2012 call on the LIFE website: Main changes in the Common Provisions 2012 (rev. Feb. 2013) (as compared to the text included in the Application Guides) Art 6.6 – introduces obligation for beneficiaries to inform the Commission of any activity by third parties that is likely to have a significant negative impact on the sites/species targeted in the project, and if appropriate to take measures to persuade third parties to refrain from such activities.Art 8.4. introduces stipulation that requirements of transparency and possibility of audit apply also to subcontractorsArt 18 – clarification of article on termination of the grant agreementArt 19 – clarification that confidentially obligations last for 5 years beyond the closing date of the projectArt 23.6 – introduces stipulation that claims for payments of the beneficiaries against the Commission may not be assigned to third parties.Art 24.1 – clarification on the start date for eligibility of costsArt 24.2 – clarification on the calculation of personnel costs and introductions of certain exceptions to time registration obligationsOld article 24.6 – removed; no obligation to report or repay interest on pre-financingArt 28 – payment deadlines (by the Commission) are shortenedArt 28.5 – clarifications concerning the payment suspension procedureArt 30.2 – introduces possibility to submit auditor's certification as justification for VAT non-recoverabilityArt. 32.13 – introduces stipulation that the right of access and assistance described in the rest of article 32 also apply to the Court of Auditors and OLAF. This list is not complete. Please refer to the full text for a comprehensive picture of the changes that have been introduced.



Modifications in Part I of the Common Provisions 2012 (legal and administrative provisions) (1/4)

- References to the numbering of articles (partially new numbering)

- Art. 5.5 Each AB must contribute financially to the project and may (formerly shall) benefit from the financial contribution of EC

- Art. 6 Common obligations for CB and ABs

• New art. 6.6 for NAT and BIO projects: communicate to EC activity by third parties likely to have negative impact on sites/species and, if appropriate, take measures to prevent third parties from such activities



- Art. 8 Subcontractors

• Art. 8.1 has been reformulated by merging old art. 8.1 and 8.2 and reflecting a part of old art. 8.4. It contains the provision to award contract to lowest offer or offer with best value for money and to avoid conflict of interest in doing so.

• New art. 8.4 c) with references to art. 10, 11, 19 and 32 of CP: Civil Liability, Conflict of Interest, Confidentiality and Audit by the EU Institutions now also applicable to sub-contractors.


Conflict of interest (economic, "family") Art 8,1 & 11:

•Seperate legal identity

•Related companies (being in controle of or being controled)

•Staff members• Demonstrate best value for money

•Same legal identity (Departments) Article 26• Excluding profit and overheads




- Art. 19 Confidentiality

•Confidentiality obligations last for 5 years (before no time limit was given)


Modifications in Part II of the Common Provisions 2012 (financial provisions) (1/6)

- Art. 23 "Union financial contribution" (formerly Art. 24)• Old art. 24.6 and 24.7 have been deleted: no more need

for specific bank account to identify funds paid by the Commission. No more recovery of interest yielded by beneficiaries on pre-financings (as of 2011 call).

• Obligation to report interest as income dissapear from 2012-projects



- Art. 24 "Eligible costs" (formerly Art. 25)

•Art. 24.1 "legal obligation to pay was contracted after the start date of the project or after the signature of the grant agreement by the EC in case this takes place before the project start date" (formerly it was only related to the signature of the grant agreement)



Provisions on personnel costs/time registration in Art 24,2 have been elaborated:

•Clarification how to calculate the hourly rates

•Service contracts are now called "contracts with natural persons" and conditions have been specified

•Use of 1720 hours/year by default if reliable time registration system not available

•Letter of secondment or contractual document for full time project staff (instead of time registration)

•Civil servants: clarification on definition and need of contractual document/ letter of secondment stressed

•Exceptions to time registration (less than 2 days of work in project/month)



• Art 28 Payment deadlines (by the Commission) are shortened by 15 days

• "Suspension periods" has been clarified further

• "Interest paid by the EC on late payments" has been clarified further



- Art. 29 (formerly art. 30) "Statement of expenditure and income" is now called "Financial statement"

• Art. 29.1 "Financial statement": the EC requirements have been clarified further (new guidelines)

• Art. 29.5 "Use of the Euro"The exchange rate for beneficiaries effecting purchases

from non Euro countries has been specified.



- Art. 30 "Value added tax" (formerly art. 31)• In case a beneficiary cannot provide a VAT certificate emitted by the responsible authority, the possibility has been introduced to provide an auditor's certification as justification for VAT non-recoveribility. This justification will be inserted in the independent financial audit, to be provided by the beneficiary at the end of the project.

- Art. 32 "Audit by the EU Institutions" (formerly art. 33)• In art. 32.8 not only the European Anti-Fraud Office (OLAF) but also the Court of Auditors are given the right of access and assistance.

Modifications in Part I of the Common Provisions 2013 (legal and administrative provisions)(1/2)

- Art. 4 Coordinating beneficiary not solely legally and financially responsible to the EC anymore but

•Is the only intermediary for all communications between beneficiaries and EC,

•Provides EC with information related to any changes in legal, financial, technical, organisational or ownership situation of any of the beneficiaries

•Monitors the actions as per grant agreement (GA),

…/…


Modifications in Part I of the Common Provisions 2013 (legal and administrative provisions)(2/2)


•Establishes payment requests and provides the EC with all the necessary reports,

•Is sole recipient of payments on behalf of all beneficiaries,

•Ensures that all appropriate payments are made to the other beneficiaries in accordance with the agreements concluded with ABs,

•Provides necessary documents in the event of checks and audits.

Modifications in Part II of the Common Provisions 2013 (financial provisions)(1/5)

- Art. 23.4 New definition of "profit" rule:

Profit = surplus of the receipts over the eligible costs of the action

Reminder: Before, profit was entirely deducted from the amount to be paid, now it is shared between the EC and the beneficiary/ies, at the rate of the co-financing.

Two types of receipts:i) income generated by the actionii) financial contributions specifically assigned by co-financiers to financing of eligible costs of the action reimbursed by the EC



receipts not to be taken into account for verification whether grant produces profit for the beneficiaries:

i) financial contributions used by beneficiaries to cover costs other than the eligible costs under the GA

ii) unused part of financial contributions which is not due to the donors at the end of the implementation period



Example (only rare cases):


ELIGIBLE COSTS(consolidated eligible costs approved by the EC)

PROFITNot deducted entirely but on the basis of the cofinan-cing rate of the grant

RECEIPTS

•EU contribution•INCOME from the action•OTHER financial contributions specifically assigned to the eligible costs


Example (most cases):


RECEIPTS

•EU contribution•INCOME from the action•OTHER financial contributions specifically assigned to the eligible costs

ELIGIBLE COSTS(consolidated eligible costs approved by the EC)


- Art. 30 Value added tax

•VAT is eligible except for

• taxed activities or excempt activities, both with right of deduction

• Activities engaged in as a public authority by the beneficiary where it is a State, regional or local government authority or another body governed by public law


Other financial issues2% rule:

The European Court of Auditors report in 2003 on the LIFE II in paragraph 48 set out that the LIFE "administrative provisions should be amended in such a way as to exclude the possibility of financing the salaries of public servants, including cases where public bodies are involved in carrying out projects…"

Temporary staff:

If the staff member of the project is hired on the first day of the project, and his/her contract does not mention the end date, but he/she quits the job on the last day of the project - is that considered temporary or permanent position?

Key issue – contract mentions the project?


Other financial issues

Use of travel logs:

•Proof the use of the car for the project.

•Apportion costs between activities.

•Short term rent of cars – probably no

•Reimbursement of use of private car – probably no IF AGRESSO identify each travel to the project



Clear reference on the invoice:

•It is defined to be LIFEXX NAT/YY/000ZZZ – ACRONYM

•At the end of the day the costs have to be linked to the LIFE project

• Number or acronym

• Project code

• Anything that links the invoice to the project area

• etc



Equipment or consumables:

•Just because items are depreciated 100% in the year of purchase does not mean it is not equipment.

• Residual value

• Stationarry, "off-the-shelf" product (held in stock)

• Available in the cupboard or should it be ordered

• Examples in the guidelines are clear• Equipment: laptop computer’, ‘database software (off-the-shelf or developed under sub-

contract)’, ‘measurement equipment’, ‘mowing machine’, etc• Consumables: materials for experiments, animal feeding stocks, materials for dissemination,

repair of durable goods given that this is not capitalised and that they are purchased for the project or used 100% for the project, etc.

•For nature projects follow the classification of the budget.



Simplify reporting:

Avoid the registration of low value invoices.

Annex copies of log books

Group invoices.

Description allow for assessing the eligibility/relation to the project



Tender rules (1/3):

How to document the selection process.

When no selection or written procedure is carried out for direct contract



Tender rules (2/3):

Anslået værdi ekskl. Moms Fremgangsmåde ved indgåelse af varekøbsaftale

DKK 0 – 99.999 Ingen formkrav.

Men vær opmærksom på benyttelsen af kontrakt - særligt betalingsbetingelser, kontraktens genstand, mangler, levering og opsigelse.

MIU råder til at gøre brug af Miljøministeriets standardkontrakt og at markedsprisen kendes. Hvis markedsprisen ikke kendes, da råder MIU til at spørge minimum to leverandører.

Er du i tvivl da kontakt MIU.



Tender rules (3/3):

Anslået værdi ekskl. Moms Fremgangsmåde ved indgåelse af varekøbsaftale

DKK 100.000 – 499.999 Der indhentes minimum to skriftlige tilbud, såfremt det økonomisk og administrativt kan svare sig. Hvis der ikke indhentes minimum to skriftlige tilbud, da skal der udarbejdes referatark på sagen med indhold af økonomisk og/eller administrativ begrundelse. Der er ved disse opgaver ligeledes krav om skriftlighed og institutionen følger denne fremgangsmåde:

1. Indhente minimum to skriftlige tilbud (frit valg ang. hvem der rettes henvendelse til). Hvis det ikke økonomisk og/eller administrativt kan svare sig, da kan punkt 1 afviges. Begrundelse skrives i referatarket på sagen.

2. Referatark på sagen med oplysninger om forventet kontraktsum mv.

3. Udarbejde en skriftlig opgavebeskrivelse med oplysninger om behov, ønsker mv. Ved udvælgelse skal der være ligebehandling og gennemsigtighed i processen.

4. Indgå en skriftlig aftale (gerne Miljøministeriets kontraktskabelon)



Foot note on model timesheet:


"INSTRUCTIONS

· For any days during the month that you did not work enter the appropriate Absence Code, i.e. sickness, holiday, recuperation of overtime, etc.

· Enter the hours you worked for the Life project each day. If you work for more than one Life project be careful to enter the hours against the correct project.

· Enter the hours you worked on other (i.e. non-Life) activities.

· After the last entry of the month, sign it and date it and pass it on to your line manager/supervisor for validation.

· Please ensure the timesheet is signed and dated by both yourself and your line manager/supervisor within the first two weeks after the month the timesheet relates to"


The happy FDO:

Pay quickly, no ineligible costs, no additional information

•Reply on previous questions in a structured way

•Address the key issue, which is often the eligibility of the costs

•Provide the requested documents

•Provide sufficient explanations to understand the documents. Focus on the relevant invormation



Issues to consider at the beginning of projects (1/3):

Establish project codes in the analytical accounting system(s).

Establish project codes in the time registration system.

Establish a time registration system.

A short description of the time registration system, i.e. the registration and submission routines for the employees and the validation procedure for the supervisor/line manager.

Public body permanent staff must be specifically seconded to the project, i.e. ensure that such instructions are issued.




Public beneficiaries should get familiar with the applicable tender rules, i.e. when competitive price offers are and are not requested. Get familiar with what kind of documentation can be requested. Keep a short description of these rules in the project files.

Other types of beneficiaries should observe the requirement of competitive price offers for contracts above 125.000 € and the necessity to be able to provide written evidence of this procedure. I should be stressed that below this threshold best value for money still apply.




Download the financial report and the CP and distribute it to your ABs if applicable.

Provide all requested information. Add but not delete columns

Establish reporting routines for the ABs.

Ensure that supporting documents are retained in 5 years.

Obtain a declaration from the national tax authorities certifying with regard to VAT, if applicable and keep this certificate in the project file.


Other financial issuesIssues to consider during the project period (1/2):

No blank cells.

Sufficiently detailed description to facilitate the assessment of the eligibility of the costs.

Classify the costs according to the budget. In case the budget does not give decisive guidance consult the CP.

In case it appear that durable goods are classified in other cost categories than durable goods, you should contact the Monitor.

Check that invoicing among beneficiaries, between their departments or between related companies does not take place.


Other financial issuesIssues to consider during the project period (2/2):

You should monitor the costs and compare them to the budget on a regular basis. If you have ABs it is therefore important that they send their updated financial report to you on a regular basis.

Time worked for the project should be registered per day.

There should be a clear reference to the project on the invoice in the format LIFEXX NAT, ENV or INF/AB/000123.

Costs incurred by co-financiers or members of the cooperate groups not listed as ABs are not eligible. This apply in particular for projects where the holding company are CB in a project and where member companies of the same company group carry out the technical implementation of the project.



Thank you !

Documents

Østersund, Sweden September 2013Platform meetingTommy Sejersen Changes in the EU Financial Regulation and the Common Provisions (Financial issues) Question